How to Brew a Midwest Downtown Renaissance

JACKSON, Mich.—With a renewed interest in Middle America, it is a good time to examine both the plight of our Rust Belt urban centers and their untapped assets.

The Great Lakes region in particular is characterized by classic downtowns sporting Italianate-style buildings made from the venerable Chicago Common brick. Some even feature architectural works of art by famed designers like Detroit’s Albert Kahn. Today this once vibrant part of our country—filled with hard working, second-generation Americans and underutilized downtowns—is experiencing a quiet renaissance spurred by unlikely sources.

Despite going through one of the toughest economic downturns since the Great Depression, the Great Lakes region still has a fair amount of large businesses and corporate headquarters in hundreds of medium-sized urban centers. Yet these companies are fighting a revolving door: new hires cost them excessive amounts of money to train, and too soon they find themselves retraining replacements. Why? According to Governing magazine

…the millennial generation, adults 34 and younger, many of whom continue to express a preference for walkable neighborhoods with bike lanes, public transit and a mix of recreational amenities. Last year, millennials became the largest component of the American workforce. … In 2013, the Urban Land Institute found that 62 percent of millennials preferred a home close to shops, restaurants and offices.

Smaller urban areas suffer from vacant storefronts, lack of dining and entertainment options, and, most importantly, market-rate housing. Since the 1970s, businesses have fled to malls and highway interchanges as well-meaning but misguided planners turned much of the existing downtown residential inventory into federally-subsidized, low-income housing. Because of the lack of housing choices, new millennial hires often choose to live a long commute away—in bigger urban cores where they can find the lifestyle they prefer. But after driving through the snowy Great Lakes winter, many quit and instead find employment they can easily walk or bike to in larger cities. In short, this new workforce prioritizes their living environment over job loyalty.

So how does a town attract businesses to save their Midwestern Main Street? There are five key ingredients:

Infrastructure. Local government must invest in downtown roads, streetscapes, placemaking, parks, and trails. If you have the vestiges of 1970s urban planning, such as roads turned into walking plazas or one-way bypasses speeding potential customers around and away from downtown businesses, you must remove these impediments to growth now. Many of these projects can take advantage of federal and state incentives that already exist.

Entertainment. One of the fastest ways to rejuvenate a downtown is to encourage development of restaurants and pubs. Basic local tax incentives, a progressive Downtown Development Authority, and a destination venue such as a craft brewery or distillery can serve as a focal point to start the resurgence. Many states offer redevelopment-zone liquor licenses at reasonable rates to spur growth.

Market-Rate Housing. Many downtowns have vacant lots that are available for new construction of market-rate apartments. Finding willing developers can be a challenge; even though available apartment inventory is low, the prevailing market rental rates are still depressed. Because banks appraise businesses based on the Income Method (which evaluates potential revenues versus operational costs), new construction in these inactive areas often appraises for less than construction costs, making conventional financing difficult. This gap between construction costs and appraised value needs to be narrowed by the use of local tax abatements and brownfield development grants and credits. Tools like these can be used to bolster the project’s internal rate of return and attract more investors without jeopardizing local tax dollars.

Basic Necessities. Most urban cores, even in small Midwest towns, are what the USDA defines as Food Deserts (“…at least 500 people and/or at least 33 percent of the census tract’s population must reside more than one mile from a supermarket or large grocery store.”) To attract a new residential population the downtown core must have easily accessible, healthy, convenient food. Several chains are experimenting with small format (7,500 sq. ft.) hypermarkets to serve the urban cores.

Retail. “Build it and they will come.” Retail is one of the last and most cautious pieces of the puzzle. Regional and national chains usually have very strict guidelines for population and demographics that determine where they will locate. Often developing urban cores do not meet the requirements of these chains, and they are not local enough to gauge the momentum first hand. The best bet for retail is to court local entrepreneurs that open destination stores like beauty parlors and candle stores. These will soon be joined by coffee shops, bakeries, and purveyors of other artisan goods. Once a critical mass is realized, regional chains will follow.

Creating the Perfect Storm

These tactics are beginning to be carried out here in Jackson, a Michigan city of 34,000. In this metropolitan area of 160,000, corporate leaders Consumers Energy and Henry Ford Allegiance Health helped form The Anchor Initiative. According to the Michigan Municipal League, “the program’s three-pronged approach stresses the value of living, investing and innovating locally. It also emphasizes the important role that private sector anchor institutions can play in developing the physical, social and economic conditions that can help the city thrive.” Some of the strategies used include rental incentives to encourage employees to live downtown.

Around the same time, the city appropriated matching funds to completely redo the streetscapes and add trees, bump outs, lighting, signage, and additional on-street parking. Part of Jackson city manager Patrick Burtch’s plan included purchasing property and razing non-historic buildings to offer developers attractive parcels for only $1. The city is also working with the Michigan Department of Transportation to return downtown bypass streets to their original two-way design, incorporating additional landscaping and bump outs to allow traditional on-street parking. A new downtown park is currently under construction with a multipurpose art gallery and amphitheater, and the urban core was just connected to over 14 miles of paved biking and running paths.

Grand River Brewery

This all got a boost from an unlikely source. In 2013, I renovated a run-down, empty, graffitied building in the heart of downtown Jackson and opened Grand River Brewery. This risky new venture offered a 220 seat restaurant, 80 seat community event room, bakery, craft brewery, craft distillery, and winery. The complete renovation of this 12,000 sq. ft. former bus repair garage and 1980s mini mall earned us a “Brick Award” by the local Chamber of Commerce. My facility became the social hub of the downtown, hosting weddings, rehearsal dinners, baptisms, church services, retirements, wakes, corporate meetings, political rallies, special events, and even public radio shows.

Then a funny thing happened. Due in part to overwhelming local support, we started to grow at a 30 percent annual clip. I was able to prove that despite naysayers, one could launch a new business in downtown Jackson and be successful. That revelation had a profound effect on the community, and a new optimism about downtown was born. Businesses that had faithfully remained there felt confident improving their buildings and services, and entrepreneurial groups became interested in developing new projects.

Three and half years after I opened the brewery, my business partners and I are building a new mixed-use, luxury apartment building. (I am still looking for a grocery store for the first floor.) Our group is also restoring an 1868 Italianate building that was formerly an iconic city restaurant, with more market-rate apartments on the upper two floors and a steakhouse on the first floor. Since our brewery launch, the downtown has added five new restaurants and five new retail stores, signed a development agreement on an old vacant Albert Kahn-designed hotel and another mixed-use apartment complex. A major engineering firm is planning to build their headquarters downtown.

Jackson is proof that the best way to revitalize a downtown is with a progressive master plan, passionate local entrepreneurs, and a good brewery thrown in.

John Burtka III, who was formerly involved in the global automotive industry, now acts as a Lean-Six Sigma business consultant, winemaker, distiller, restaurateur, entrepreneur, and county commissioner.

“Walkability”, no better way to tell the handicapped that they and their money are not wanted. I will keep my Wal Mart, you can keep your “progressive” city planning. Usually when someone says “progressive” it means we are going to lose freedom and money.

Public money to subsidize private projects? Using taxpayer dollars to increase the rate of return of some guy’s private property? What a silly editorial decision to run a piece like this in these pages.

This is great example of cooperative urban development. I only wish every small and mid size town would follow suit. I really appreciate this well written piece. We need more such stories and specific examples. They inspire.

But there are cases where new development is chosen as a municipality’s goal, and the gap between construction costs and appraised value must be bridged. Vacant city land produces no tax revenue, but a tax abated project still provides school funding and local income tax even before they sunset. Large investor will go where they get the greater returns, leaving smaller cities behind. City’s and Regions that don’t want encourage smaller local developers need to invest in grass seed to cover there lost opportunities for long term revenues!

Creating infrastructure to attract workers and businesses to an area seems a much better use of tax payer dollars than corporate incentives. Improving downtown areas also raises the standard of living making the area more economically viable.

Wow! Chris Mallory, this viking character (too timid to use its real name) and Patrick are exactly what one should aspire NOT to be.

This is a great story and one showing that self-government CAN work in America. Don’t let the misanthropes pull you down. Misery loves company and these people, Chris, “Viking” and Patrick are miserable.